A recent ruling by the California Supreme Court could have lasting consequences for timekeeping practices and the payment of wages for hourly employees. In the case of Troester v. Starbucks Corp., the court ruled on July 26, 2018 that Starbucks had to pay the plaintiff for time spent on regular, off-the-clock tasks. The court found that, at least in this particular case, plaintiff’s claims for unpaid wages were not exempt from payment under the FLSA de minimis rule and declined to apply the longstanding federal rule to California wage claims of the type raised by plaintiff. The court, however, did not entirely eliminate the possibility of the de minimis rule applying to state wage claims.

In Troester, the plaintiff routinely had to perform tasks related to closing the store after he had clocked out. These tasks included things like shutting down the computer system and locking the doors. Under the FLSA de minimis rule, infrequent and insignificant periods of work that occur outside work hours and cannot be precisely recorded need not be counted as work time. The court found that the routine, regular nature of the tasks performed by plaintiff was the crux of the issue: because employees are regularly doing these tasks, employees should be compensated for them and Starbucks’ argument that the time was de minimis was not accepted. Indeed, the court said: “The relevant statutes and wage order do not allow employers to require employees to routinely work for minutes off-the-clock without compensation.” (emphasis added).

Because this ruling applies to all hourly workers in California, the implications could be quite broad. Retailers will have to ensure that employees who open and/or close a shop have a consistent way to capture time spent doing the required tasks if those functions would normally not be recorded as hours worked. Employers will then need to go further and evaluate what sort of tasks are regularly expected from their hourly workers when they are off the clock, whether it’s opening/closing activities, bank deliveries, or other functions that may take place outside of work. Employers will need to determine whether these tasks are routine enough to devise a system to capture the time. For example, if an employer expects an hourly employee to routinely respond to emails or texts during off hours, there will need to be a way to capture this time and policies and procedures should be put in place to ensure that happens.

Currently, this ruling is limited to California, whose wage and hour laws do not make mention of a de minimis exception. However, this issue could potentially spread to other states with similarly drafted statutes regarding hours of work. Given the ubiquity of technology, and the increased pressure to stay connected to work via smartphones, VPNs, etc., it would be no surprise to see more and more plaintiffs attempt to use this ruling to work to capture what may have previously been considered de minimis time. Employers should be looking carefully at their policies and procedures for timekeeping and to help protect from any potential legal issues.

On May 21, 2018, a divided U.S. Supreme Court held that employers can force employees into individual arbitration and avoid class action lawsuits involving those same employees.

By way of background, in 1925, Congress passed the Federal Arbitration Act (“FAA”), which validated arbitration clauses.  In 1935, Congress passed the National Labor Relations Act (“NLRA”), which gave employees the right to work together for “mutual aid and protection.”  The case of Epic Systems Corp. v. Lewis shed some light on how those two laws are supposed to co-exist.

Epic and its two sister cases centered on employment contracts that contained arbitration clauses which required individual arbitration of all claims.  The employees in question wanted to bring both individual and class action claims in court against their employers. They argued their NLRA rights to group activity trumped the FAA, permitting them to avoid arbitration the clauses and proceed with a class action.

The Supreme Court majority ruled that the FAA required the enforcement of arbitration clauses, regardless of the NRLA.  The majority noted that it wasn’t until 2012 that the National Labor Relations Board began to argue that the NRLA’s right to group action nullified the FAA and prevented arbitration clauses that limit class claims – a 77-year delay in making the argument.  The Court’s majority read the NLRA’s “concerted activities” provision (known as Section 7) as giving employees the right to unionize and bargain collectively, but not to avoid the FAA or ignore arbitration clauses.

The dissenting opinion in the case criticized it as undermining federal law (the NLRA) meant to “advance the well-being of vulnerable workers.”  The dissent fears that arbitration clauses will chill employment claims if class actions are barred because an individual claim would either not be worth pursuing or the individual employee would fear retaliation.  The NRLA was designed to give employees an equal place at the table when setting the terms and conditions of employment, and, according to the dissent, this decision allowing arbitration clauses that forbid class claims undermines that purpose.

This Supreme Court ruling means that employers can continue to insert arbitration clauses forbidding class claims in written contracts.  The arbitration process is familiar to employers who have collective bargaining agreements with unions.  It, however, may not be as familiar to non-union employers.  If an employment contract has an arbitration clause, or an employee signs one as well at of employment, then typically all claims that arise from the contract or relationship subject to the clause must go to arbitration.   The selected arbitrator will then hold a hearing similar to a trial, but typically with more relaxed standards and often less discovery, and then will issue a ruling. This is certainly different in many ways from a class action or individual lawsuit filed in federal or state court.

At Troutman Sanders, we have many attorneys experienced in arbitration in the employment context, and we would be happy to assist with any employment arbitration matters, involving both unionized and non-union workers.

Many employers require employees and applicants to take personality testing (think Myers-Briggs). Others are seriously considering adding this as a component of their hiring and employee engagement efforts. Companies want to get a sense of an individual’s opinions, attitudes, feelings, motivations, preferences, interests, emotional makeup, and style of interacting with others. This information, some believe, can help employers make predictions regarding job performance and success. At the very least, it allows employers to get to know an applicant through more than just the traditional interview process. These tests, however, raise many legal issues, particularly in the areas of potential discrimination claims and privacy concerns.

As an initial recognition, personality is not a protected class. Indeed, courts have routinely held that someone’s personality is a legitimate, nondiscriminatory reason to not hire an applicant or take adverse employment action against an employee. Yet personality testing still has the potential of violating the Americans with Disabilities Act (“ADA”), Title VII of the Civil Rights Act of 1964 (“Title VII”), and the Age Discrimination in Employment Act (“ADEA”). For example, if an applicant can show that the personality trait for which the employer screened was really a mask for discrimination of a protected class, the employer could be found to violate federal discrimination laws. So, if the employer is screening for a personality trait it connects with a protected class and makes its decisions based on that trait (possibly as a proxy or substitute for that class), that can constitute discrimination.

Furthermore, Title VII, the ADA, and the ADEA all have requirements for all employee testing that employers must adhere to when giving a personality test. For example, Title VII permits employers to administer professionally developed ability tests and take action based on the result. But, such tests must be implemented in a way that does not discriminate against protected classes, and ideally validated in advance as not having a discriminatory effect. Furthermore, employers are prohibited from adjusting the test scores based on an individual’s protected characteristics; using different cut-off scores for different protected classes; or otherwise altering the results of the test in any way. Lastly, the test must be job-related for the position at issue and consistent with a business necessity.

Testing clearly presents risks – of claims of discrimination, in addition to actual proof of such behavior. There have been numerous lawsuits related to personality testing under the ADA, Title VII, and the ADEA, with topics litigated including:

  • allegations of bias in determining traits important for the job
  • an employer purportedly asking questions that implicate protected characteristics
  • claims of bias in administration and scoring
  • whether the testing is a prohibited pre-offer medical examination
  • whether the test suggests a disability or a perceived disability based on the results, and
  • allegations of administering the test to discriminate based on age.

So, before you implement, add or change tests for employees or applicants, you will want to consider the risks they pose and balance that against the expected benefits of the testing.

Personality tests also raise potential privacy issues. While personality tests do not appear to violate the federal Employee Polygraph Protection Act, they may violate more restrictive state laws. For example, a Massachusetts law prohibits testing that renders an opinion on a job applicant’s honesty. Employers may also face claims based on the intrusiveness of the questioning (i.e., the questions are highly personal and/or offensive), or a failure to protect the privacy of the results. These state-law claims have thus far been brought have not seen notable success, but they have also not been tested nationwide, and new state and local privacy laws are enacted every year.

As personality testing becomes more and more popular among employers, interpretations of existing laws will inevitably become clearer and more settled. But new laws will likely join them, creating regular confusion and doubt. The best bet is to work your favorite employment counsel to help review and craft a personality testing policy that both conforms with existing law and is flexible enough to evolve as the issue changes over time.

In today’s internet-driven world, employers have never had more options from which to recruit new hires. Sites like Zip Recruiter, Monster.com, and Career Builder specialize in talent acquisition, serving as stand-alone classified pages of sorts. Employers also can utilize ever-present social media channels, like Facebook and LinkedIn, to find the best candidate for a position. The old rules of hiring, however, still apply even to these modern recruiting avenues.

Recently, the Communications Workers of America (“CWA”) filed a class action lawsuit against Amazon, T-Mobile, Cox Communications, and Cox Media group alleging age discrimination in their Facebook ads. Specifically, the complaint alleges these employers, and many others, have adjusted the settings on their job advertisements to target potential employees under 40. Furthermore, Facebook has a feature that allows the advertiser to see why an individual saw the specific add (i.e., did he or she meet the targeting criteria for the ad).

This suit poses many interesting questions. First, does advertising on Facebook and other social media sites alone mean the pool from which employers are pulling candidates skews younger, or is social media so ubiquitous that it does not make a difference?  If the ubiquity of social media means it does not create discrimination issues, then can employers engage in targeted advertising?  In other words, are there non-discriminatory criteria employers can use to take advantage of social media’s wealth of built-in information?  Can they create ads that will reach those best qualified to apply versus creating a general ad that may flood their HR team with wholly unqualified applicants?

Another interesting question will be how social media differs from traditional advertising. In an earlier era, employers could similarly target younger applicants by selecting when and where they advertise. For example, an employer could take out an ad in a magazine it knows is popular among the age 18-35 demographic. Or a company could advertise a job opening during a television show popular with the same section of the population. Is advertising through targeted Facebook ads truly different simply because there is written proof the employer selected an age range?

These are all very complex questions that do not have an immediate answer. Employers, however, always need to be cognizant of how and to whom they focus their job-opening advertisements so as not to run afoul of the various anti-discrimination laws – or even draw unwanted attention from plaintiff’s lawyers or labor unions. We are happy to advise and assist in creating hiring processes and policies that will both protect your business and help you find the best candidates for your positions.

Last month The New Yorker published a story detailing years of claimed sexual harassment and misconduct by Hollywood producer Harvey Weinstein. Since then, it seems that every day features new allegations of similarly inappropriate behavior by public figures, from actors, to authors, to public radio executives. It is unclear whether this is a long- or short-term trend. It is, however, an opportune time for employers to review their own policies and procedures in place to prevent and respond to claims of sexual harassment.

Sexual harassment policies should be clear and unambiguous as to what is not appropriate for the workplace. They should prohibit unwelcomed sexual advances, requests for sexual favors, or any other verbal or physical conduct of a sexual nature. Policies should also make it clear that submission to such conduct must not be an implicit or explicit condition of employment, that response to such conduct will not serve as a basis for continued employment, and that such conduct will not be permitted to interfere with an employee’s work. In sum, the goal of any policy should be to clearly prohibit both specific harassment and the creation of a hostile work environment.

An effective policy must go beyond prohibiting demands for sexual favors or inappropriate physical touching at work. Actions such as sexually-oriented “jokes” or “teasing” should not be permitted in the workplace. Offensive flirtations, repeated verbal abuse of a sexual nature, degrading comments about appearance, and the display of sexually suggestive or explicit materials must also be clearly banned. Employers should also clearly state that subtle pressure for sexual activity, physical contact or blocking of movement are also inappropriate.

These prohibitions, however, do not mean employees cannot have friendly interactions. Indeed, we recommend including a caveat that the policy does not consider things like occasional socially acceptable compliments or consensual social relationships as harassment. The stated goal of the policy should be to eliminate unwelcomed, intimidating, hostile, or offensive behavior. It should also be noted that the policy applies to and protects employees of all genders.

As important as a strong anti-sexual harassment policy is, there must also be a complete procedure for enforcing it. This procedure should have at least two reporting mechanisms. The first should be what would be considered the “normal” reporting mechanism, an employee, position or department designated to receive complaints of harassment and investigate. There also needs to be a secondary reporting mechanism for when normal person is either the subject of the complaint or in a position where investigation may be too difficult. For example, if the normal investigator is the head of HR and the accused is her second-in-command, then the secondary reporting mechanism would be best to use. The goal is for an impartial, objective investigation to occur – not one that is just impartial, but also one that is properly perceived as impartial too.

The complaint procedure should also guarantee as much confidentiality as possible. Victims, witnesses, and those who report harassment should be assured their information will be kept as confidential as possible while still conducting a thorough investigation. They should also know that non-frivolous complaints will not result in discipline. So, if they report behavior in a good-faith belief that it violates the sexual harassment policy there will be no negative consequences even if the investigation cannot substantiate the claim. In contrast, complaints made in bad faith, to retaliate or harass, or to otherwise abuse the system should not be tolerated.

Every investigation into a complaint or possible situation of harassment must be thorough, objective, and unbiased. Investigators must seek out and interview witnesses. They should make it clear that neither the complainant nor the accused should have any inappropriate contact with the witnesses during the investigation. Investigators should also seek any documentation, video surveillance, or other tangible evidence of the alleged events available to them. All reasonable steps should be pursued to try to get as clear of a picture as possible as to what truly happened.

Lastly, the policy should clearly define the consequences of such unacceptable behavior. Recommended action for substantiated violations can range from a simple written warning all the way up to and including termination – whatever is necessary to stop the behavior and ensure it is not repeated and the victim (and others) are not at further risk. It should also be made clear that while discipline for violations of the policy may be progressive, the employer reserves the right to implement whatever punishment it deems appropriate, including termination.

Employers know that sexual harassment is a serious issue and should not be tolerated in any workplace. Beyond the civil liability it may bring, it makes a workplace undesirable and saps employee morale. It can hurt a company’s brand, reputation and standing in the business community. This general outline as to how such policies and procedures should work is a start, but smart employers will reach out to counsel to review and update their policies and procedures and make sure they are never the subject of any similar negative headline news articles.

 

 

Last month, the Trump Administration announced plans to end President Obama’s Deferred Action for Childhood Arrivals (“DACA”) program. This change in policy is sure to have a significant impact on employers.

First, a little background on DACA. Beginning in the 1990s, illegal immigration from Central and South America changed. Illegal immigrants used to consist of predominantly working-age men who crossed the border to go to work, then returned at the end of the day. This changed when more and more families crossed illegally to settle permanently in hopes of finding a better life here in the United States. This change meant that millions of children who grew up here but were brought here illegally were vulnerable to deportation due to a choice their parents made for them. It is very difficult to obtain legal status after coming here illegally. So, these millions of childhood arrivals could potentially be forced to return to a country of which they have no recollection without some sort of protection.

In response, President Obama authorized DACA to provide that protection. Immigrants who came to the U.S. before 2007, who were under 15 years old at the time they came and were younger than 31 in 2012 were permitted to apply for DACA protection. To receive protection from deportation, they had to have a nearly spotless criminal record and either be enrolled in high school or have a high school diploma or equivalent. DACA’s protection lasted two years, but could be renewed. In total, roughly 800,000 out of an estimated 1.3 million immigrants have obtained DACA protection. Part of this protection included authorization to work.

With the ending of DACA, employers will bear some of the cost of abiding by new regulations (or lack thereof). Many of the largest employers in the country have hired the so-called Dreamers – individuals working and living under DACA’s protections. Apple’s CEO, Tim Cook, claims they have 250 employed at the tech giant. It is estimated that 91% of Dreamers are employed. So, with DACA gone, roughly 720,000 employees will become ineligible to remain employed overnight. The cost of replacing these employers is staggering. One think tank estimates it will cost employers $6.3 billion in turnover costs.

Fortunately for employers, the Trump administration announced it will delay ending DACA by six months. It is possible that during that time Congress will enact a law affording the same or similar protections allowing those same individuals to remain and stay employed. Therefore, employers do not need to start terminating their Dreamers right away. However, now is the time to create an action plan so that you are prepared if Congress is unable to reach and enact a solution. Employee turnover is costly and disruptive; abrupt and significant turnover is even more so. Smart employers will be prepared.

On Tuesday, April 4, 2017, the Seventh Circuit Court of Appeals became the first Federal Appellate Court to hold that Title VII of the Civil Rights Act of 1964 protects discrimination on the basis of sexual orientation.  While some states have already enacted laws protecting against that type of discrimination, and many employers have added such protections into company equal employment opportunity policies, this marks the first time sexual orientation has been deemed protected at this level under the federal Civil Rights Act. Continue Reading What Does The Landmark Ruling Declaring Sexual Orientation Discrimination Illegal Under Title VII Really Mean?

Last Fall’s election, where so much was said about hacked emails, should serve as a reminder to employers that cyber security is of the utmost important.  Cyber crime continues to rise across the globe.  In some European countries it even outpaces traditional crime.  A single data breach can cost a company millions of dollars in lost revenue, fines, and corrective action, not to mention the damages to its reputation and brand loyalty.  So what are the biggest cyber threats and how can businesses best defend against them? Continue Reading Cyber Security & Employees

Franchise agreements typically make clear that a franchisee is a separate entity from the franchisor and that the franchisor has no liability as an employer of anyone the franchisee hires and employs.  Indeed, traditionally franchisors have not been routinely deemed joint or co-employers with their franchisees.  This is because the franchisor usually does not control hiring, firing, wages, breaks, and other day-to-day operations of the franchisee to the extent necessary to create an agency relationship between a franchisee’s employee and the franchisor.  A recent case decided by a federal court in California, however, might put that traditional thinking and legal relationship in doubt. Continue Reading Could A Franchisor Be Liable For A Franchisee’s Employment Decisions?

Now more than ever employers must have a clear and concise policy regarding work email accounts.  While it is commonly understood that an employee’s work email is property of the employer and subject to search at any time, it is important to inform employees of this.  A recent case, Hoofnagle v. Smyth-Wythe Airport Commission out of the Western District of Virginia, demonstrates the importance of a clear policy on email accounts.

Hoofnagel was the manager of a small, local airport who was fired for his use of an email account he used both personally and for business to write an impassioned and volatile email to U.S. Senator Tim Kaine.  The manager’s email came in the wake of the Newtown school shooting tragedy and vehemently defended gun rights.  The airport did not have its own email system, or a written policy addressing the use of email and accompanying expectations.  The manager created the email account when he started there and the airport published the address as an official point of contact.  Further complicating the matter, the manager signed the email with his name and position.  Shortly thereafter, the airport commission voted to terminate the manager and he filed suit.  After the airport terminated the manager, it began going through his emails to check for airport business. Continue Reading The Importance of a Proper Email Policy